MANAGING PATENT PORTFOLIOS TO MAXIMIZE THEIR VALUE

1. MANAGING PATENT PORTFOLIOSTO MAXIMIZE THEIR VALUE January 29, 2014 Anaheim, California Sponsored by McDermott Will & Emery LLP #IHCC12

2. Panelists • Andrew Mickelsen • Partner, McDermott Will & Emery LLP • amickelsen@mwe.com • Chris Bright • Partner, McDermott Will & Emery LLP • cbright@mwe.com • Melissa Alexander • Associate General Counsel, Clinipace Worldwide • malexander@clinipace.com

3. Importance of IP

4. Portfolio Acquisitions • 580 MIPS patent assets - $350 million • 1,100 Kodak patent assets - $527 million • 800 AOL patent assets - $1 billion • 6,000 Nortel patent assets - $4.5 billion • 24,500 Motorola patent assets - $5.5 billion

5. Portfolio Value • Barrier to entry • The right to exclude others from making, using or selling an invention • Competitive edge • Marketing patented or patent-pending products and services • Offensive tool • Licensing and litigation • Defensive tool • Freedom to operate and litigation counterclaims • Cross licensing

6. Proactive Management • Take stock of portfolio • Inventory • Categorization • Define objectives • Multiple perspectives • Align portfolio activity with objectives • Development • Maintenance • Divestiture • Enforcement

7. Inventory Portfolio • Status • Pending • Issued • Maintenance fees • Ownership • Assignment of rights • Content • Claimed • Described

8. Categorize Portfolio • Technology • Mature • Active • Strategic • Key words • Competitors • Competing products • Competing solutions • Other industries

9. Define Objectives • Strategic objectives • Support product development • Enhance marketing of company and products • Monetization is not the only source of value • Financial objectives • Reduce/reallocate costs • Generate revenue • Management education and buy-in • Company, marketing, R&D, etc.

10. Portfolio Development • New applications • Aligned with key product areas • Invention harvesting • Quantity vs. quality • Continuation application strategy • Balance between validity and infringement during prosecution • Foreign filing • Reevaluate jurisdictions • Reevaluate filing criteria

11. Portfolio Maintenance • Milestone decision points • Office actions • Allowance • Maintenance fees • Keep objectives in mind • Use business, technical and legal input • Update objectives and categorization as company evolves

12. Portfolio Divestiture • New and growing markets • Spectrum of divestiture options • Market value factors • Risks and risk mitigation

13. Patent Markets • Competitors • Other industries • Defensive patent aggregators • Patent assertion entities • Patent exchanges

14. Divestiture Options • Sales/assignments • Licenses • Exclusive • Non-exclusive • Limitations • Geographic • Duration • Field of use • Align with objectives and markets

15. Market Value Factors • Applicability • Blocking patents • The life of the patent and license • Established licensing royalties • Comparable licensing rates • Derivative or convoyed sales • Profitability • Others

16. Divestiture Issues • Markets tend to be inefficient and lack transparency • Difficult to define market for inherently unique assets • Transaction costs may exceed fair market value for any particular asset • Unintended consequences • Impact on overall business • Public perception of divestiture activity • Increased likelihood of litigation

17. Risk Mitigation • Prioritize objectives and allocate due diligence resources accordingly • Validity, infringement, freedom to operate • Strategically group assets • Focus on target, technology, industry, etc. • Consider including trade secrets / technical know-how • Utilize Patent Office procedures • Re-exam, post grant review, supplemental examination • Nurture successful assets • Successful track records tend to increase valuation

18. Manage Expectations • Valuation • Timeframe • Internal resource requirements • Public perception • Post-license activity • Litigation risk

19. Enforcement Goals • Defensive or offensive • If defensive: cross-licensing or other business deal • If offensive: injunction or money • If injunction • If money • Patent markets • Market value factors • Licensing and litigation program

20. Licensing Meeting • Infringement claim charts • Claim construction • Validity • Damages (financial) model • Lost profits • Reasonable royalty • Injunction • Declaratory judgment risk • Fed. R. Evid. 408

21. Litigation Resources • Attorney Fee Arrangements • Contingency • Hourly • Fixed fee • Success fee • Litigation financing • Costs • Other considerations • Inter Parties Review and other Patent Office procedures • Counterclaims and countersuits

22. Litigation Preparation • Ready to try the case • Theme(s) from the outset • Company and invention story • Key company witnesses • Key company documents • Preserve documents • Protect the attorney-client privilege • Litigation counsel support

23. Take-Away Points • Identify and obtain buy-in of business objectives • Proactively align portfolio with business objectives • Realistically assess the financial potential • Prepare for the possibility of litigation • Manage expectations